Thailand Defense Industry

The Thai government plans to develop the domestic defense industry to reduce the country’s dependence on imports, promote technology transfer, and strengthen national security. Thailand is highly dependent on foreign suppliers to procure military equipment. Thailand’s import of defense equipment continues to increase every year as the country works to modernize its armed forces. The U.S. is one of the largest sources of defense equipment for Thailand. However, the Thai government plans to develop its domestic defense industry to reduce the country’s dependence on imports, promote technology transfer, and strengthen national security. Demand for military and defense equipment from allied countries, including the United States, remains high. Security threats in Thailand include potential political unrest, occasional border disputes, domestic terrorist and separatist group activities in the troubled southern provinces, natural disasters, human smuggling, and illicit drug trafficking. Since the economic crisis in the late 1990s, Thai defense budgets increased every year to maintain combat readiness, to neutralize the regional arms race among Associations of Southeast Asian Nations (ASEAN), and to modernize the country’s armed forces. Local production is limited to conventional weapons, ammunition, and military supplies provided by a few Thai military-owned weapon production units. By 2011, the defense industry in Thailand was relatively small and supported mainly the military. There were 48 defense-related industries under the Ministry of Defense. Out of this number, 21 were operated by the Royal Thai Army, seven by the Royal Thai Navy, 12 by the Royal Thai Air Force, one by the Royal Thai Armed Forces Headquarters, and seven by the Office of the Permanent Secretary, Ministry of Defense.

The major buyers of defense equipment are the three branches of the Thai armed forces: the Royal Thai Army (RTA), the Royal Thai Air Force (RTAF), and the Royal Thai Navy (RTN), which includes the Marine Corps. Thailand’s defense equipment suppliers come from all over the world and offer fairly competitive pricing and equipment package terms. The United States is one of the prime defense suppliers to Thailand due to commonality with NATO and Thai-U.S. joint military exercises.

Thailand's industries have traditionally been closely linked with agriculture. From the post-war years up to the late 1950s, the major processing facilities were rice mills, sawmills, sugar mills, ice factories, textile and gunnybag factories, tobacco leaf curing plants and cottage of household industries, such as fabric weaving and basketry, to supply local needs. All these industries grew up as a result of free market forces and with limited government assistance.

Before the 1970s, domestic defense production was extremely limited. Local industrial plants made items such as uniforms, storage batteries, glassware, preserved foods, some electronic devices, and certain pharmaceutical and chemical products. The production of armaments, began on a modest scale in 1969 and received increasing government assistance.

In August 1976, the Ministry of Defense announced that it had invested more than US$200 million since 1969 in developing domestic production of ordnance items. This investment resulted in the local production of 5.56mm, 7.62mm, and .30 calibre ammunition. In addition, the government operated facilities for limited rebuilding and modernization of military vehicles, aircraft engines, and helicopters. A modern dockyard provided similar improvements as well as maintenance on naval vessels and their armaments. Most of these capabilities were achieved with American technical assistance.

In December 1977, Prime Minister Kriangsak announced plans to establish a number of new factories to increase the strength of the country's arms industry. In particular, he hoped to meet internal security requirements for ammunition and light weapons. The industrial expansion called for private as well as government-owned facilities. The primary vehicle for this was a privately owned company called Thai Interarms, which received substantial government aid. Divided into four subunits, the company manufactured small arms, ammunition, gunpowder, and other explosives. In addition, a factory established in Ta Khli, a joint venture between the Thai government and the Winchester Company of the United States, had a projected production capability of 1 million tons of ammunition annually, including rockets.

The U.S. traditionally has been Thailand's primary source of defense equipment. By the 1990s, China had become an important supplier of frigates and wheeled vehicles. Traditional European suppliers are the UK, France, Germany, Italy, Spain, and the Czech Republic. The Thai military has also purchased defense equipment from the Republic of Korea, Israel, Austria, and Indonesia. This diversification of defense suppliers led to increasing competition for U.S. vendors.

All the military services, the Army, Navy, Air Force, and the Marine Corps, routinely seek to upgrade existing capabilities. Since Thailand possesses a large standing force (in the 1990s, about 190,000 in the Army, 48,000 in the Air Force, and 53,000 in the Navy and the Marines), the requirements for military equipment varied widely. In general, all the services looked for ways to upgrade basic communications gear and transportation equipment. However, due to tight defense budgets, the Thai military placed strong emphasis on cost.

In his 04 March 2011 address on the topic “Research and Development toward the Defense Industry and the Creative Economy,” Prime Minister Abhisit Vejjajiva cited creative industrial development as a new dimension in the next decade. He maintained that since the Government had a clear-cut policy of promoting the creative economy, the defense industry will greatly benefit from research and development, which will contribute to Thailand’s overall economy. The address was made in an event held at the Royal Thai Navy Convention Hall in Bangkok on March 4, when the Prime Minister stressed the Government’s readiness to support the development of the defense industry for national security. The event was organized by the Defense Technology Institute, a public organization under the Ministry of Defense.

He said that although Thailand has diverse economic structures, the country still heavily depends on the international economy. For instance, Thai exports account for 60 percent of the Gross Domestic Product; therefore, the global financial crisis in 2007-2008 had an adverse impact on the Thai economy. The Prime Minister said that Thailand had been successful to a certain extent in safeguarding against external challenges, as it has applied the “Sufficiency Economy” philosophy initiated by His Majesty the King. The country is also giving a major boost to the creative economy to add value to Thai products and services from history, culture, wisdom, and innovation.

He pointed out that the defense industry is another sector that could be developed for the benefit of not only national stability but also the national economy. More importantly, the production and development of defense items could reduce the country’s dependence on imports, promote technology transfer, and create job opportunities. The Prime Minister cited research and development as an important factor for the progress of the defense industry. He said that the Cabinet, during its recent meeting, approved national research policies and strategies, with an emphasis on research work that may lead to production, or add value in the economic and social systems. He stated that the needs of the military should also help shape the directions for research and development in line with national strategies. Since economic development and national safeguarding must go together, the Prime Minister believes that the creative economy policy will help reduce risks concerning national security.

The Cabinet meeting on Tuesday 28, June 2011 acknowledged the Joint Declaration pertaining to the strengthening of military cooperation within ASEAN in global community in order to combat new challenges. With it, three documents connecting to the declaration are presented as have previously been proposed by Ministry of Defense. 1. Three-year objective plan of ASEAN Defense Ministers meeting framework (2011-2013). 2. A proposed document pertaining to the establishment of ASEAN peacekeeping operation network center. 3. A proposed document pertaining to the cooperation in defense industry in ASEAN framework.

The "Policy Statementof the Council of Ministers" Delivered by Prime Minister Yingluck Shinawatrato the National AssemblyTuesday 23 August B.E. 2554 (2011) stated that the government would "Develop and strengthen the armed forces and nationaldefense capability in safeguarding the sovereignty and security of the state. Support the modernization of the armed forces and strengthen the national defense industry on the part of both the public and private sectors in order to develop our capability to produce our own weapons and equipment. "